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Buyer counts are down, but there are plenty of ways to improve list performance

October 2009 By Stephen R. Lett

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There's growing pressure on list performance. It's more about contribution to profit and overhead, as it should be, but this has caused mailers to reduce circulation and prospect less. As a result, 12-month buyer counts are down, and there are fewer housefile names to leverage — a real dilemma. Here's how to improve list performance for email and print.

Email List Performance
E-append is an excellent way to grow your housefile. This involves having an outside vendor append email addresses to your customer list where emails are missing or messages bounce back as undeliverable.

To avoid deliverability and "black listing" issues, follow e-append best practices. For example, your welcome message should be innocuous. I suggest using your logo and text with no personalization. The welcome message may carry an offer — some marketers have attached offers to drive retail store traffic — but that's not necessary. Use follow-up efforts to close the sale.

A household-level match maximizes the number of matches — 30 percent hit rates aren't uncommon. In every housefile match, flag each record "I" for individual and "H" for household. Individual-level matching results in higher quality records, but a lower match rate — i.e., 10 percent to 15 percent.

Once the append is complete, you need a strategy for the appended records. Opt-outs supplied with appended records should be suppressed immediately. The remaining appended records should receive a message from your company within a week after the append is completed. I suggest sending a series of three or four messages to the appended records before they're added to your normal retention database messages. Tell these customers why they're hearing from you and why they should be glad about it.

Let your customer service reps know an append has been facilitated, and give them copies of the welcome message so they can address any customer service calls or issues. Append is truly a home run when executed properly.

In addition, support your catalog with pre- and post-emails to yield an increase in response. Consider sending two or three post-mailbox follow-ups.

Single web-only buyers from pay-per-click sources, internet-only buyers and catalog inquiries all should be optimized by the co-op databases before you mail them. Web-only buyers sourced from pay per click likely won't respond to catalog mailings. If the consumer has no history of buying direct, save the postage.

Co-op Database Performance
Resist the temptation to pull out of any co-op databases. Catalog marketers decide which databases to keep or drop through a multitude of factors — performance, overall contribution, etc. If a cataloger feels it's supplying more buyers to a co-op than it's getting back, that catalog may decide the contribution doesn't favor it and drop that co-op. Catalogers naturally want to protect their biggest asset in such difficult economic times — their housefiles.

However, not every cataloger is going to pull out of the same co-op databases. Even within the same product category, certain co-ops work well for some and not others. However, the names shared by all are still required to build an effective model and supply the best prospecting names.

Here's a scenario currently happening across all co-ops: Cataloger A has decided to pull out of co-ops 1 and 2 based on the above mentioned criteria. But what if the prospect names from Cataloger B work the best for Cataloger A, but Cataloger B has chosen to pull out of co-ops 3 and 4 and remain in co-ops 1 and 2? Both A and B will, in turn, lose performance in their prospecting names.

In essence, on top of everyone's 12-month buyer counts decreasing and straight list rentals' performances faltering, now the co-ops are affected. As catalogers continue to pull out of various databases, this situation will continue to spiral downward.

In order for catalogers to get through these tough times and keep their prospect names at the highest level, it's imperative everyone stays with each co-op.

Outside List Performance
Maximize outside list performance by increasing the response rate, average order size or both. I prefer to focus on improving the response rate because it yields more new buyers, thereby growing your 12-month buyer file faster.

Don't be concerned about trying to increase the average order size to prospects, because it can come at the expense of response. When prospecting, the goal should be to add as many new buyers to the housefile as possible by maximizing response.

Select outside lists based on recency of last purchase. You also should maximize rollouts before testing new lists; double the usage each time if there's enough list universe. Looking for buyers who've purchased multiple times recently is also a good way to improve response.

After you maximize list continuations, fill in with the lists you want to test. Use marginal list optimization to improve outside list performance.

There are two ways to use list optimization: selection (used for premerge lists) and suppression (used postmerge to identify and suppress rental singles, i.e., one-time buyers). Both techniques use 10 percent to 20 percent of a given file.

Most catalogers choose their list selections based on what worked well last season and what's currently working. This isn't a "true" science because there are many factors that need to be considered when evaluating list performance. Just be certain you do the proper list analysis and use every technique possible to improve your list performance.

Stephen R. Lett is president of the catalog consulting firm Lett Direct (steve@lettdirect.com).

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